It certainly sounds both political and religious to me.
The Vatican City is not a “nation” in the sense of a self-governing people — it’s not big enough to have any substantial permanent population, but an independent sovereignty allowing the Holy See to be independent of other sovereign powers. And this helps preserve the independence of the Church from the state. Henry VIII and Stalin are what you get when the Church is at the mercy of the state and is not ultimately independent. It is not remotely similar to Islam and its ideal theocratic state, a caliphate, where religious law is the sole supreme law for all.